Earlier this week, the shareholders of Citigroup said “hell no!” to the notion of paying company CEO Vikram Pandit $15 million. Today, they took their anger a step further and filed a lawsuit in federal court, saying Citi execs should not be rewarded for doing a so-so job.
Tuesday’s vote to reject Pandit’s pay package was the first time a major U.S. bank’s shareholders have nixed an executive compensation plan since they were given the right to do so by the 2010 Dodd-Frank Act.
According to the suit, filed yesterday in a Manhattan federal court, the fact that 55% of shareholders voted against Pandit’s raise — part of a total $54 million executive compensation package — “has cast doubt on the board’s decision-making process, as well as the accuracy and truthfulness of its public statements.”
The plaintiffs say the lawsuit, which asks for Pandit and the bank’s directors to pay damages back to the company, is necessary to confirm the validity of the shareholders’ vote: “Absent this (lawsuit), the majority will of the company’s stockholders shall be rendered meaningless.”
Pandit’s pay for 2010 was only $1 (though he was probably still able to get by on the $800 million Citi paid for his hedge fund in 2008). Shareholders rejected the proposal to pay him $15 million for his 2011 efforts.